DRN-6273618

The complaint Miss P has complained about how Marshmallow Insurance Limited handled a claim she made on her motor insurance policy. What happened In August 2024, Miss P’s parked car was hit by a stolen vehicle when she wasn’t in it. Miss P made a claim on her motor insurance policy with Marshmallow, who accepted the claim and wrote off her vehicle. Marshmallow then began investigations into recovering costs from the third-party. In September 2024, Marshmallow considered the value of Miss P’s vehicle and, after receiving advice from an engineer, paid her around £2,100 for it. Miss P thought her vehicle was worth more and complained to Marshmallow. She also told them she wasn’t happy with how the claim was progressing. In November 2024, Marshmallow sent Miss P a complaint response letter. They said they wouldn’t be paying Miss P more for her vehicle and didn’t think they handled the claim unfairly. Throughout the claim, Miss P felt Marshmallow wasn’t progressing things as they should, and made several complaints to them. Marshmallow sent further complaint responses in December 2024, March 2025, and August 2025. In each, Marshmallow acknowledged there were delays but said they weren’t responsible for these. In their August 2025 complaint response, they said they could have managed Miss P’s expectations better and provided more frequent and informative updates. They acknowledged Miss P was a vulnerable customer due to her being pregnant and was already distressed since the claim had been going on for a long time. Marshmallow paid Miss P £200 compensation to recognise this. On 6 November 2025, Miss P referred her complaints to this Service. She told us Marshmallow caused delays; incorrectly valued her vehicle; haven’t refunded her excess; mishandled her claim; didn’t update her fairly; had her continue to pay her premium; and gave her conflicting information. When this Service told Marshmallow about the referral, they reconsidered they position and thought £400 would be a more appropriate amount of compensation in the circumstances. An Investigator looked into what happened and agreed Marshmallow should pay the £400 they offered but didn’t think Marshmallow needed to take any other action. Miss P disagreed with the Investigator’s findings. She said she has already been paid £200 and wants an additional £400 (bringing the total of compensation to £600); a defined timeframe for when her claim will be settled and her excess returned; and assurance she won’t bear financial loss if her excess isn’t recovered from the third-party. The complaint couldn’t be resolved so it came to me to decide. I wrote a provisional decision in two parts. Firstly, I let the parties know that I would only be considering part of Miss P’s complaint because there were issues that this Service didn’t have the power to consider. Then, for the issues I could consider, I let them know why I’d be partially upholding the complaint. This provisional decision’s findings form part of this final decision, so I’ve copied them in below. I also invited any further comments or evidence

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before I issued a final decision. I said the following: What parts of Miss P’s complaint can this Service consider? We don’t have a free hand to consider every complaint we receive. Our powers to consider complaints are set out in the Financial Services and Markets Act 2000 (FSMA) and in the rules known as the Dispute Resolution Rules (DISP), written by the Financial Conduct Authority (FCA) in accordance with the powers it derives from FSMA. These form part of the FCA handbook, and I need to consider those rules alongside the specific circumstances of Miss P’s complaint when determining whether hers is a complaint this Service can consider. The section of the DISP rules that applies here is DISP 2.8 which sets out the time limits for referral. DISP rule 2.8.2R(1) states that if a business doesn’t consent, this Service can’t consider a complaint which is referred to us more than six months after the date on which the business sent their final response – unless in the view of our Service, the failure to comply with the time limits was as a result of exceptional circumstances. Marshmallow set out in each final response letter they sent Miss P that they didn’t consent and have since confirmed to us directly they don’t give permission to look into any complaint points that are out of time. Miss P complained to Marshmallow about the valuation of her vehicle. They sent a final response letter about this complaint on 10 November 2024. In it, Marshmallow explained that they couldn’t change the valuation report from their engineers and how they came to the amount they did. They didn’t uphold the valuation complaint. Miss P also has complained about delays to her claim and how the claim was being handled on numerous occasions. Marshmallow responded to these concerns in final response letters dated 20 November 2024, 12 December 2024, 14 March 2025, and 8 August 2025. Miss P complained to this Service about the way Marshmallow handled her claim on 6 November 2025. This was more than six months after Marshmallow sent four of the final response letters mentioned above. A response with new referral rights doesn’t necessarily withdraw an original final response or take away the limit it imposes – and I’ve thought about the content of the August 2025 final response in case it does. In it, Marshmallow answered complaint points about the handling of the claim. They explained their position on the delays, saying many of them were outside their control, but that they should have managed Miss P’s expectations better and provided more frequent and informative updates. They offered £200 compensation. There’s no dispute this Service can comment on the events Marshmallow only considered for the August 2025 final response letter. I’ve considered whether the compensation Marshmallow awarded was for issues stemming from earlier in the claim journey or from March 2025. Marshmallow’s internal notes say they were upholding the delay aspect of the complaint because, despite being aware the police report can take time, it had been six months since the claim started and they weren’t managing expectations for Miss P. I checked Marshmallow’s investigation notes for both the complaint that led to the March 2025 final response letter and the August 2025 one. Their notes for Marshmallow’s March response included correspondence and comments up until 7 March 2025. Their notes for the August 2025 final response included little information about what happened between the start of the claim and March 2025, then focused on what happened between then and 23 July 2025. I can see Marshmallow were thinking in the round about how long the claim had taken, but their stance on who was responsible for the delays hadn’t changed from the previous

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complaint response letters. Instead, they acknowledged service failures between March and July 2025 and how, considering the length of the claim and her specific circumstances, it affected Miss P. I appreciate it will come as a disappointment to Miss P, but I don’t think we can consider the merits of her complaint points Marshmallow considered in the November 2024, December 2024, or March 2025 response letters – this is because these complaints weren’t referred to this Service in time. I’ve thought about whether there were exceptional circumstances that meant Miss P couldn’t comply with the six-month time limit. But considering she was communicating with Marshmallow during this period, I don’t think she was prevented from contacting this Service to refer her complaints. I note that Miss P made a new complaint to Marshmallow in February 2026 about their ongoing handling of her claim. And Marshmallow sent a complaint response letter to her in March 2026 about this. As the Investigator explained, this complaint was raised with Marshmallow since Miss P came to this Service, and I haven’t considered it in my decision. She could speak to the Investigator if she wanted this Service to consider it under another reference. I also note Miss P has complained about further issues including having to sign an agreement so the third-party insurer can release funds. I haven’t seen Marshmallow had a chance to respond before Miss P contacted this Service – so I haven’t commented on that here either. Delays and claim handling As ours is an informal service, I’m not going to comment on every point or piece of evidence Miss P and Marshmallow sent us. Instead, I’ve focused on what I consider to be key or central to the complaint. But I’d like to reassure both that I have considered everything submitted. I’ve thought about whether Marshmallow are responsible for any avoidable or unreasonable delays in handling Miss P’s claim or for the provision of poor service. And whether they should have acted differently considering the information they had at the time. Marshmallow have said they haven’t handled the claim incorrectly, but by the time they had the police report, it had been six months since the claim was first raised, and they subsequently didn’t update Miss P as they should have. They acknowledged their service failures and have offered £400 compensation. When Marshmallow received the police report, they requested costs from the third-party insurer and let Miss P know about this. But it doesn’t look like they actively followed up on this until 7 July 2025, when they put pressure on the third-party insurer by saying that insurer may need to handle the claim under the Road Traffic Act (RTA) which allows for settlements even if their policyholder remains unresponsive. Marshmallow also offered Miss P’s details to move the claim forward and said the policyholder is vulnerable. I think they were trying to get the best outcome for Miss P in their communications with the third-party insurer, but they could have been more active in doing so without waiting for Miss P to pressure them into doing more. I was pleased to see Marshmallow acknowledged Miss P had particular vulnerabilities which meant she was significantly affected by any potential delays – and that it was unfair of them to leave her without any update for several months, especially after how concerned she was about the progression of her claim in the months before. Marshmallow have now offered a total of £400 to put things right, and I’m satisfied this is a fair amount of compensation. They have paid Miss P £200 to date, so I’m intending to direct them to pay the remaining £200. The policy premium

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Miss P’s policy says if as a result of a claim, her vehicle was determined to be a total loss, the policy would cease without refund of premium unless Miss P changed her vehicle within 30 days to another vehicle. I appreciate Miss P chose not to add another vehicle to her insurance, but the premium was due anyway. Her premium will have been paid up front by a credit provider who Miss P will have been paying back every month. Miss P made a claim and costs were yet to be recovered at the time she complained to Marshmallow – so she had to pay the full premium, and no refund would have been due to her, regardless of whether she paid in full up front or whether she was paying in instalments to the credit provider. Marshmallow accepted my provisional decision. Miss P disagreed with elements of it. Miss P said the £200 already paid to her should be considered separately to the £400 compensation Marshmallow offered – and that £200 doesn’t adequately reflect the situation. She also said there were exceptional circumstances that prevented her from referring certain complaint points to this Service earlier. And that I should be considering ongoing delays and claim handling. Were there exceptional circumstances? Miss P said the failure to comply with the six-month time limit mentioned above was as a result of exceptional circumstances. She said she was heavily pregnant, dealing with medical complications and significant stress – while receiving assurances from Marshmallow that there wasn’t anything further for her to do. DISP 2.8.4G says an example of exceptional circumstances might be where the complainant has been or is incapacitated. I’ve thought about Miss P’s situation, and I don’t doubt this was a stressful period of her life, but I don’t think the circumstances would have prevented her from referring her complaints to this Service. She was interacting with Marshmallow during this time, and she could have contacted us if she had chosen to. So, it remains my opinion that this Service doesn’t have the power to consider complaint points Marshmallow commented on in the November 2024, December 2024, or March 2025 response letters. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. As I explained in my provisional decision, the compensation I’m directing Marshmallow to pay Miss P is for periods of poor claim handling between March and July 2025. I’ve considered Miss P’s additional comments and evidence, and I appreciate she thinks she should be paid more than this for issues that have happened since then, but I’m not commenting in this decision on any issues raised after Miss P came to this Service – she may be able to raise these separately. Considering Marshmallow’s service failings mentioned above and Miss P’s circumstances, I still think £400 was a fair amount of compensation in the circumstances. I haven’t been provided with anything in response to my provisional decision to persuade me to depart from what I’ve said. So, for the reasons set out in my provisional decision, I’m directing Marshmallow to pay Miss P £200 – which brings the total compensation to £400. My final decision For the reasons above, I partially uphold this complaint and direct Marshmallow Insurance

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Limited to pay Miss P £200. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss P to accept or reject my decision before 12 May 2026. Andrew Wakatsuki-Robinson Ombudsman

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